INTERNATIONAL FINANCE CORPORATION

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FINANCING OPPORTUNITIES IN THE ENERGY SECTOR IN
IN ALGERIA
INTERNATIONAL FINANCE CORPORATION MAY 2006
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IFC is the Largest Source of Loan and Equity
Financing for the Private Sector in Emerging
Economies
178 Member Countries

• AAA rating
• Over 80 of funds borrowed in international
  markets
• Invests about US5.0 bn every year for own
  accounts
• Mobilize additional US1.0bn p.a. in syndicated
  finance
• US19.3bn portfolio (in 120 countries)

Since 1956, approximately US73 bn invested in
3,319 private sector companies in 140 developing
countries Today, IFC holds equity in about 800
Companies
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Projects we Finance in the Energy and Resources
Sector Products We Offer

• Oil, Gas and Energy
• Appraisal and Development(no wildcat
  exploration)
• Oil and Gas Pipelines
• Oilfield Services
• LNG
• LPG
• FPSOs
• Logistics support infrastructure
• Power projects

• Products
• Senior Debt
• Project Finance
• Corporate Loans
• Income-Participating Debt
• Convertibles
• Revolving Credit
• Equity
• Corporate
• UJVs
• Partial Credit Guarantees
• Acquisition Financing
• Debt Refinancing

• Chemical Projects
• Refineries
• Petrochemicals crackers PP/PE VCM/PVC
  PTA/PET Methanol et. al.
• Infrastructure storage terminals
• Inorganics Hydrogen peroxide chlor-alkali
  carbon black soda ash
• Fertilizers ammonia/urea phosphoric acid DAP

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IFCs ability to finance from own account
mobilize financing from additional sources
Project type
IFC's investment for its own account
Greenfield, total cost less than 50 mm
Up to 35 of project cost
Greenfield, total cost more than 50 mm
Up to 25 of project cost
Expansion or rehabilitation
Up to 50 of project cost

• IFCs total financing must be less than 25 of
  total company capitalization, and IFC does not
  manage or have largest stake
• IFC umbrella for B Loan participants IFC lender
  of record, immunity from taxation and
  provisioning requirements

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IFC Syndicates Full Debt Package Through the B
Loan Program

• A loan is for IFCs own account
• B Loan is for account of participant banks
• 1 Loan Agreement signed by Borrower IFC IFC
  umbrella for B loan participants
• IFC administers entire loan
• IFC distributes payments pro rata among itself
  and participants
• Participants accept commercial risks of project
• Benefits of IFC umbrella
• better pricing/tenors than otherwise available
• preferred creditor access to foreign exchange
• IFC loans exempt from withholding taxes and
  provisioning requirements

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The IFC Value Proposition

• Long-term financing own and resource
  mobilization in tough markets
• Risk sharing as equity partner
• Tax benefit
• Environment and social best practices
• Linkages
• Community development
• Local suppliers
• Micro-finance
• In-house capabilities (technical, legal,
  insurance, environment/social)
• De facto political risk mitigation
• Corporate governance

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IFC in Algeria
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IFC Portfolio in Algeria
Project Sector IFC Investment Amount Year (US
million) Société Générale
Algérie Financial Markets 1.5 equity 1997 Alger
ia Trade Enhancement Facility Financial Markets
20 debt 2000 Algerian Cement Co. General
Manufcaturing 45 debt 2003 2004 Sider-Alfasid
Annaba General Manufacturing 25
debt 2003 Algiers Investment
Partnership Financial Markets 0.2
equity 2000 Arab Banking Corp Financial
Markets 1.9 equity 1998 2002 Arab Leasing
Corp Financial Markets 0.7 equity 2002

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IFC Current Activities in Algeria
Sector IFC Investment Amount (US million)
General Manufacturing 12 equity Financial
Markets 19.5 equity 12.5 debt Infrastructur
e 10 debt Tourism 25 debt Chemicals 24
equity
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IFC Private Enterprise Partnership

• IFC launched the Private Enterprise Partnership
  for the Middle East and North Africa (PEP MENA)
  in 2004
• Technical assistance to help promote the
  development of the local financial markets, small
  medium size enterprises, environmental
  awareness and development of public-private
  partnerships
• Partnerships signed with
• Confédération des Entrepreneurs Industriels de la
  Matidja, a (CEIMI) 500 member SME organization
• Association nationale des Exportateurs Algériens
  (ANEXAL)
• Club dAction et de Réflexion autour de
  lEntreprise (CARE), first Algerian think tank of
  young entrepreneurs
• Conseil Consultatif National pour la PME
• Others Doing Business with Government, technical
  assistance for CPA (bank slated for
  privatization) and SME toolkit with ministry of
  SMEs

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IFC Strategy in Algeria

• Algeria has potential for a sizeable program
• IFC sees its role as facilitating private sector
  investment
• IFC is keen on
• Supporting the continual improvements in the
  investment climate
• Assisting in the privatization process
• Developing the financial sector, including SMEs
• Encouraging private participation in
  infrastructure
• Helping to strengthen the local private sector

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IFC Algeria Office

• Local presence since 2002 through NAED
• Now expanded to cover Maghreb region
• Abderahmane Fodil will be IFCs Oil, Gas, Mining
  and Chemicals dedicated staff member based in
  Algiers starting September 2006

Abdelkader Allaoua Associate Director Middle East
North Africa Department 19, rue Emile Marquis
Djenane El Malik Hydra 16035 Algiers,
Algeria Tel [phone] Fax [phone]
95 82 E-mail aallaoua_at_ifc.org
Rana Karadsheh Senior Investment Officer Oil,
Gas, Mining Chemicals Department 2121
Pennsylvania Ave. N.W. Washington, DC, 20433
U.S.A. Phone [phone] Fax (1-202)
974-4325, 974- 4324 E-mail rkaradsheh_at_ifc.org
Abderhamane Fodil Investment Officer Oil, Gas,
Mining Chemicals Department 2121 Pennsylvania
Ave. N.W. Washington, DC, 20433 U.S.A. Phone
(1-202) 458-9252 Fax [phone], 974-
4324 E-mail afodil_at_ifc.org
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Highlights of Current Projects
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RED MED

• Logistics Support Center
• The Red Med Group (Red Med, Star Aviation, etc)
• Local logistics company serving the hydrocarbon
  sector
• Renowned for quality, reliability and integrity
• Integrated services base camp, mobile camps,
  air and ground transportation, truck/crane/car
  lease and others
• Total project cost of US32 million
• IFCs Involvement
• IFCs first investment in a local company in
  Algeria
• US10 million quasi equity for facility upgrade
  and expansion
• Advise on corporate governance

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Fertial

• Fertilizer Production
• Fertial was privatized in 2005 to Grupo Villar
  Mir (GVM) of Spain
• Domestic fertilizer company
• Capacity of 990,000 tons of ammonia, 660,000 tons
  of nitric acid, 198,000 tons of urea and 740,000
  tons of compound fertilizers
• GVM committed to upgrade the plants to meet
  international operational and environmental
  standards
• GVM committed to helping develop the domestic
  Algerian farming sector
• Looking to develop a new ammonia plant with
  capacity of 1.1 million tons per annum
• IFCs Involvement
• IFCs largest investment in chemical sector in
  Algeria
• US24 million in equity
• Will likely be financing the new ammonia plant

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Other Oil, Gas, Mining and Chemicals Projects
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Chemicals Portfolio US1.1 Billion
Catalyzed over 15 billion in project investments
By Product
By Region
US522 million for IFCs account US645
million held by participants
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Oil and Gas Portfolio US2.0 Billion
?6 UJVs ?Equity ?Mezzanine ?Debt
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IFC works with foreign investors and local
companies on complex cross-border transactions

• Azerbaijan / Georgia - Early Oil Project
• Financing of a US2 bn project (0.5 bn pipeline
  element) for Amoco, Unocal, Exxon, Turkish
  Petroleum, and Lukoil
• Precedent for multilateral financing of large
  deals in this region
• Mitigation of political and cross-border risk
• IFC investment US100 mm A loan, US100 mm B
  loan
• Azeri Chirag Gunashli Project
• ACG field complex is being developed in phases by
  a consortium of 11 local and international
• oil companies
• IFC led the financing US300 mm for ACG field
  development
• Project currently producing 140,000 bbls/d
• Production will ramp up to 1,000,000 bbls/d
• BTC Pipeline
• 1,750 km Baku Tblisi Ceyhan cross-border pipeline
• Project cost is approximately US3.8 billion
• IFC provided 250 million and lead the financing
  for other
• lenders including multilaterals, ECAs,
  commercial banks and political risk insurers

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Landmark Transaction in Argentina

• Argentina - Pan American Energy
• US250 million unsecured financing for PAE (Pan
  American Energy), second largest oil gas
  producer in Argentina
• PAE recognized as a good corporate citizen
• Financing included US135 million syndicated loan
  7 year loan longest syndicated for an argentine
  borrower since crisis
• Transaction completed in less than 4 months
  (mandate to commitment)
• LAC IFC Plus facility subsequently signed MOU
  with client launching technical assistance
  project.

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IFC provides flexible financing to growing
Independents

• Bangladesh / India Cairn Energy
• Development of oil and gas assets in Bangladesh
  and India
• IFC plans to provide a US150 mm revolving
  corporate facility as part of a larger syndicated
  debt issue
• IFC participation sought by Cairn for greater
  comfort on political risk and help structure a
  more focused Environment, Health Safety
  Management Plan and its Corporate Social
  Responsibility Policy.
• IFC providing support on SME development and
  community issues

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IFC provides flexible financing to growing
Independents

• Egypt / Bulgaria Melrose Resources
• IFC provided a US25 million revolving corporate
  facility
• Funds used for capital expenditures and
  restructuring group debt
• Development of gas production from the El
  Mansoura and Qantara concessions in Egypt
  and the Galata concession in Bulgaria
• Soco International
• SOCO keen to partner with IFC given exposure in
  emerging markets
• 45 million reserve-based revolver to SOCO
  International
• Funding to go towards Capex in Yemen Vietnam

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IFC works with clients on greenfield Projects

• Thailand Vinythi
• Fully integrated PVC plant with a capacity of
  195,000 tonnes per annum (tpa) at a total cost of
  US416 m
• IFC assisted through the Thai crisis by providing
  restructuring advice and facilitating capital
  increase
• Helped set environmental standards for the
  pre-treatment of effluents before they are
  released into common treatment facilities
  operated by local authorities
• IFC investment US115 m (A Loan US28m, B Loan
  US70 m and C Loan US17m)
• Venezuela Profalca
• Construction of a propane/propylene splitter to
  produce up to 140,000 tpa of polymer grade
  propylene at a cost of US102m
• IFC investment US47m (A loan US24m B Loan
  US23m)

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Expansion Modernization Projects

• China Maanshan Carbon Black
• Modernization and expansion of a plant with a
  total cost of US30 million
• Project improves environmental performance and
  transforms state-owned enterprises
• IFC helped establish a resettlement and
  compensation mechanism for retrenched workers
  also helped obtain speedy approvals from local
  and central authorities
• IFC investment US11m (A Loan US9 m, equity
  US2 m)
• Philippines Philipinas Shell Petroleum
• Replacement with modern 110,000 bpd refinery with
  thermal cracking unit at total cost of US667m
• Worked with Shell and the government in
  establishing precedent setting environmental
  regulations for the refining industry in the
  Philippines
• IFC investment US120m (A Loan US35 m, B Loan
  US85 m)

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IFC invests its own money when access to capital
is difficult

• Kenya Magadi Soda Ash
• Financed a US24m modernization program to (i)
  increase capacity efficiency of soda ash
  production facilities, (ii) upgrade manage a
  railway line, and (iii) improve port facilities
  and environmental standards
• IFC provided A Loan of US9m
• China Suzhou Huasu Plastics Co, Ltd.
• 100,000 tpa PVC resin plant, 24,000 tpa PVC
  film calendaring facility
• Provided otherwise scarce long-term limited
  recourse financing
• IFC took a US2.5m equity stake and provided
  US44m in A and B Loans

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IFC has developed long-term partnerships with its
clients

• Egypt Alexandria Carbon Black (ACB)
• IFC worked with the client since 1992 when the
  client had difficulty attracting financing
• IFC provided subsequent investments in 1997, 1998
  and 2003 for expansions
• ACB is now setting standards for efficiency,
  environmental performance and productivity. ACB
  is one of the largest exporters to Europe of
  carbon black
• IFC investment 1992 (A Loan US7 m, equity
  US1.5m) 1997 (A Loan US5m, equity US1.5m)
  1998 (A Loan US7.5m) 2003 (A Loan US5m)
• Pakistan Engro Chemicals Pakistan Limited
• IFC assisted employees in 1991 with an employee
  buyout of Essos shares in an ammonia/urea
  complex
• IFC provided financing with subsequent
  expansions, as well as subsidiary companies in
  PVC and a chemical storage terminal.
• IFC Investment in ECPL 1991 (A Loan US36 m, B
  Loan US5 m, Equity US5.5 m) 1995 (A Loan US10
  m, B Loan US8 m)
• IFC investment Engro Vopak 1996 (A Loan US12 m,
  B Loan US5 m) Engro Asahi 1997 (A Loan 14.25 m)
• Both clients have expressed interest in Algeria

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IFC has helped clients strategically position
themselves in the petrochemical markets

• Brazil Suzano Petroquimica
• Suzano acquired 50 stake in Polibrasil for
  US277 million, allowing Suzano to take 100
  control of Polibrasil. Suzano is now the largest
  PP producer in Latin America
• IFC provided funding for (i) refinancing the
  bridge loan for the acquisition (ii) the
  debottlenecking of Polibrasils operations (iii)
  corporate restructuring of Suzano and (iv) some
  debt refinancing
• The acquisition allowed Suzano to become a fully
  integrated chemical company
• IFC investment A Loan US50 m C Loan US10m B
  Loan US150 m
• Turkey OPET Petrolcülük A.S
• Project involved construction of a greenfield
  terminal and tank storage facility, expansion of
  the companys retail network, and acquisition of
  a small terminal
• Opet had been suffering from a weak competitive
  position and with the boosting of its storage
  capacity and expansion of its retail network,
  OPET positioned itself to meet the challenges of
  an increasingly liberalized fuel market
• IFC investment A Loan US25 m B Loan US40m

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Summary of IFCs experience in the chemicals
sector

• Petrochemicals
• NPC, Thailand gas cracker
• Copesul, Brazil naptha cracker
• Copene, Brazil naptha cracker
• Samsung, Korea petrochem/aromatics complex
  restructuring
• HMC Polymers, Thailand PP
• Petroken, Argentina PP
• Politeno, Brazil PE
• Ipiranga I II, Brazil PE, PP
• Indelpro, Mexico
• Profalca, Venezuela PP
• Grupo Zuliano, Venezuela petrochem complex
• Suzhou, China PVC
• Vinythai, Thailand PVC
• Engro PVC, Pakistan PVC
• Tuntex, Thailand PTA
• Rhodiaco, Brazil PTA
• Rhodia-ster, Brazil PTA/PET
• Oxiteno, Brazil EO/MEG

• Fertilizers
• ICS, Senegal phosphoric acid
• Indo Jordan, Jordan phosphoric acid
• Engro Chemicals, Pakistan ammonia
• Trigen II, Trinidad Tobago ammonia
• Fosfertil, Brazil SSP, TSP, MSP, DAP
• GNFC, India ammonia, urea
• Deepak Nitrate, India ammonia, Urea, DAP
• PQB, Bolivia ammonium nitrate
• Toaz, Russia ammonia
• Inorganic Chemicals
• Alexandria Carbon Black, Egypt Carbon black
• Continental Carbon (CCIL), India Carbon Black
• Maanshan I II, China Carbon black
• Rain Calcining, India calcined carbon
• Peroxythai, Thailand hydrogen peroxide
• Chengdu, China potassium hydroxide PVC
• Prodesal, Colombia caustic soda, chlorine

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In summaryIFCs value add

• Long term partner
• Equity and Debt
• Environmental, social and other expertise
• Risk mitigation
• Honest broker role
• Support both local and international companies